2022 AVCA Venture Capital in Africa Report
Our fourth edition of the AVCA Venture Capital in Africa report presents an overview of the venture capital ecosystem. It provides an analysis of the latest trends and development of Africa’s start-up investment landscape and the profile of the investors active on the continent.
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2022 Venture Capital in Africa ReportSummary of Key Findings:
- By region, West Africa maintained the top spot for the second consecutive year, with Nigeria as the most active country both in the region and on the continent.
- Dealmaking was concentrated in the Financials sector, which assumed 31% of deal volume and 42% of deal value.
- The 2022 median deal size across all investment stages was US$2.0 million, a 43% increase from the 2021 fullyear median of US1.4 million.
- 15 super-sized deals in companies raising both venture capital and venture debt took place in 2022, with a combined value of US$2.2 billion.
- 1,000+ investors were active in Africa’s venture ecosystem in 2022.
- Startups raising their first round of venture financing only accounted for 37% of VC deal volume in 2022.
- The path to parity gained momentum - startups with a gender diverse founding team raised a cumulative total close to US$950 million.
Overall, 2022 was undoubtedly a challenging year for VC investment globally, with total global venture capital climaxing at $445 billion for the year. Venture capitalists put US$100 billion more to work last year than they did in 2020, despite tighter investor purse strings and an increasingly unfavourable funding climate in 2022. VC funds were, however, sitting on a record US$586 of dry powder in 20226, on the back of strong fundraising activity the previous year. This, therefore, begs the question – were the low deployment levels and decrease in activity during 2022 only considered so when compared to the stratospheric levels of 2021, but otherwise strong when viewed in isolation? Or does it represent the beginning of a downturn in global venture funding?
Africa raised US$5.2 billion in venture capital across 786 deals in 2022, representing 3% of the total volume and 1.2% of the total value of global venture funding in 2022. While the global venture market experienced significant contractions in
startup funding to varying regional degrees, Africa’s venture ecosystem was relatively
stable and only experienced a funding drop of less than US$50 million compared to 2021. Comparatively, Latin America saw the biggest YoY declines in startup funding to the tune of 59%, followed by Asia which saw contractions of 35%. Consequently, the funding gap between Africa’s closest socio-economic comparator, Latin America, saw a near-fivefold decrease from US$14.8 billion in 2021 to US$3.1 billion in 2022.
Although the volume and value of venture capital in Africa is relatively small compared to other regions such as North America and Asia, it has been growing steadily in recent years and shows potential for further growth in the future.
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